Trump’s new chip export levy reshapes semiconductor trade

Trump shakes up trade policy with a pay‑to‑play chip export deal, while the broader semiconductor market continues strong growth.

The New York Times recently published an article noting President Trump has made himself "The Commander in Chief of the Chip Industry," which leaves the market to question: how much government involvement is too much?

Recent developments in U.S. trade policy have now yielded a controversial arrangement between the Trump administration and major chipmakers Nvidia and AMD, allowing AI chip exports to China in return for a significant revenue share. This takes place as the global semiconductor market continues along its robust growth trajectory in 2025.  

Trump’s chip export revenue-share deal

The Trump administration’s efforts to revitalize the domestic semiconductor industry have been unconventional to be sure. In a new turn of legal ambiguity, the U.S. has approved a controversial deal allowing Nvidia and AMD to resume shipments of advanced AI chips to China on the condition that 15% of all China-generated chip revenues are sent back to Washington.  

The revenue-share model, effectively a policy-mandated royalty, follows the conclusion of a Section 232 national security investigation, which reclassified certain AI hardware exports as “conditional-use technologies.” Companies like Nvidia and AMD can now ship those products, but only under government-sanctioned terms. Already, the latest agreement has sent waves through the semiconductor industry and left analysts wondering if it is legal in the first place.

While the deal opens immediate revenue pathways for chipmakers by reinstating access to China’s massive AI development market, critics have been quick to sound the alarm. Legal experts point out that the Trump administration’s rules may violate the Constitution’s ban on export taxes. It’s likely that litigation and legislative pushback will soon follow.  

National security analysts are more concerned with the strategic implications. By monetizing U.S. tech dominance, specifically in an area as critical as AI, they posit the U.S. may weaken its long-term leverage over China’s AI development pathway. Indeed, some fear the move could benefit China more than it does the U.S.  

By contrast, financial markets see the deal as a boon. Investors welcomed the policy as a middle ground between a full export ban and unrestricted access, enabling Nvidia and AMD to retain their foothold in China amid ongoing trade tensions. Yet, the market’s short-term optimism could fade if other countries retaliate or if the U.S. expands this pay-to-play model to other sectors.  

More fundamentally, this new framework signals a shift in the U.S. government’s approach to chip policy from enforcement toward monetization. That pivot will generate revenue today, but risks complicating future export control negotiations, especially if allies are concerned about maintaining a unified stance on tech containment.  

For manufacturers and supply chain leaders, this case study highlights the fact that future trade compliance may come at the cost of transactional, quid-pro-quo arrangements. Sourceability can help organizations navigate this opaque terrain by facilitating thorough assessments of risk-averse components based on the latest market insights.  

Strong growth in the global semiconductor market

Despite policy-driven instability, the global semiconductor market is gaining momentum into the latter half of 2025. The World Semiconductor Trade Statistics (WSTS) organization now forecasts 15.4% annual growth for the year, bringing the total market size to upward of $728 billion.  

This surge comes thanks to a strong first half, where global semiconductor revenues reached $346 billion, up 18.9% year-over-year.  

Growth is being led by the logic and memory segments, which jumped 37% and 20% respectively in the first half. Surging demand for AI infrastructure buildouts and early-stage edge AI adoption continue to define the market for these components. Advanced consumer electronics and traditional cloud infrastructure also offered growth contributions in these areas. Sensors also outperformed, growing by 16% in the frame while analog and micro categories saw moderate growth of around 4% each.  

However, segments including discrete semiconductors and optoelectronics posted single digit declines of 4% and 0.5%, respectively. Modest contraction here is expected to continue in line with recent trajectories.  

These mixed results are indicative of a market increasingly shaped by technological relevance. Segments tied to next-gen compute and AI infrastructure will continue to capture outsized value while traditional categories defined by legacy components contend with saturation and supply chain reshuffling.  

Regionally, the Americas and Asia-Pacific remained growth leaders, supported by aggressive AI adoption and strong government incentives. Europe is stabilizing with modest upward revisions, while Japan is projected to decline slightly due to waning demand for legacy components.  

This divergence in segment and regional performance underscores the importance of risk-sensitive sourcing strategies. As growth continues to concentrate in compute-heavy segments, so too do geopolitical and regulatory pressures. Logic and memory already reside at the center of U.S.-China trade tensions and will likely be disproportionately affected by developments like the Trump administration’s chip export tariffs and new revenue-sharing conditions.  

The coexistence of aggressive trade policies and booming chip demand necessitates strategic agility from procurement teams and OEMs. Sourceability can support semiconductor businesses in building better supply chain resilience and addressing areas with downturn risk. With our powerful market intelligence platform and team of experts, we can help guide strategic diversification and risk mitigation efforts even as the industry is disrupted by myriad forces.